15. What is a Yield Curve

The Fed influences short-term interest rates. They do not influence long-term rates - supply/demand and investor expectations determines this. For example, the economy is overheating and the Fed has been gradually raising the fed funds rate (short-term). Investors foresee rising inflation and short-term rates rising and sell long-term bonds and steepen the curve. Or the Fed could be raising short-term rates and investors foresee weak economic performance and perhaps rates will not only stop rising, but will fall. They would buy long-term bonds sending the long-term yield down and causing an inverted yield curve.

The Fed does not cause an inverted yield curve on purpose to slow down the economy. The Fed would also never want to cause a recession, which has happened every time after an inverted yield curve. All of this is much harder in practice and very difficult to time, which the Fed has had trouble doing.

Thanks Preston for the wonderful videos. I have a doubt on the yield curve, do we need to subtract the inflation rate to get the actual value of the yield %?

Amazing communicator

I appreciate your presentation.

Thanks for these fantastic resources! I've read the book and am now going through the videos. Scary and complex to simple gaining confidence! What a great thing to share. Happy sailing!

The US Dept Treasury website doesn't seem to have the yield in graphical form anymore. Is anyone else having trouble finding the charts?

These videos are a gem!! I would like to know if I am Canadian should I refer to a Canadian version of the FED or is the FED the main indicator/influence of interest rates here too?

love theys videos you are my m.v.p

Here's the number to call the treasury department 202-622-2000 and complain about the historic yield curve chart not coming up, if we all start to make them aware they could do something about it, I called and they said they will put a request about it not working

In a nutshell fed action is before market and behind economy thanks a lot!

Question... 5% per yer for next 30 years or just straight 5% after 30 years?

January 2019, curve is flattening a lot........ might be a hint as to whats to come

Wow Amazing! Thank you so much for all your videos , I was walking blindly into the economy all this time. Greatly appreciated.

I don't understand something about the curve - is it showing the yield of currently traded bonds or the bonds that the federal reserve is issuing on that particular day?

Excellent video. 很好

great video, it would be nice if link is updated as it does not work any longer

where is the yield curve link?

The yield curve you show of the FED is of the variation that a bond emited in that year by the government will have till it hit the 30 years old?

It’s August 2019 now and the yield curve is looking inverted once again

I thought flat yield curve is a negative indicator and upward sloping yield curve is a good indicator. Which is opposite of what you are saying in the video.
I thought upward sloping yield curve is pretty normal because longer term bonds involves more risk, so investors seek more compensation for it, therefore long term bonds would have a higher yield.
When yield curve is flat, it means more investors are choosing to buy long term bonds which drives the price up, and therefore reduces long term bond yields causing the curve to be flattened. The reason why more investors are demanding long term bonds is because the economy might experience a recession where the risk of investing in other areas is greater than the risk of buying a long term bond.
Correct me if I am wrong.

Will you do a video of their updated site to show how to follow along? Kinda confused.

2020

He made this video in 2012. Here we are in 2020 and the yield curve has inverted.

Preston, will you marry me?

I don't get it, is it a "yield" curve or "interest rate" curve? or is it the same thing? why did you start talking about borrowing money? what is the relation to "yield" on bonds?

awesome video! One small comment: The link used in the vid has changed slightly. Who can give me and maybe some other people the new one? Many thanks!

@preston Pysh does your TIP finance tool work for ASX listed companies or US only?

what a valuable lesson.Prolly learnt more in 5 of these videos , than doing economics at school.

8 year after post, the video's remain all their value

fire

3 % is low ? 2020 its 1.4% for 30 year bond and nothing for short term bond, you would be rightout stupid to buy bonds right now

amazing! I had a look at the data for this year and I could very clearly see how the interest rate just dropped to almost to zero when the Corona crisis started. I love your videos, they are just so good.

Thanks for the video, I am unable to find the chart on the Treasury website aswell, trying different links posted here, can someone advise me on how to find it please??

Amazing video , very insightful. Love it. Opened my mind !
Thank you Preston !

With a camera to the window the woman who would need some ideas on my watch LOL will it all my don’t wanna come home yo yo-yo bully bully all of that my dog are you normal idea going gym can you get your machine

a positively sloped yield curve doesn't always indicate that a recession is coming right? so what type of a positive yield curve should cause us to worry and what type not so much?

OMG!!!!!!

Do someone have the website that shows the chart has his I do not find it now and it's been a long time since he posted

This information is timeless. The fed is probably doing yield curve control now in 2021. Hello future bond traders watching this in 2031. Did you hodl your bitcoin? Did you make a million dollars on Dogecoin? Did Klaus Schwab buy up all the real estate and enslave us?

Thanks you sir

Thank you very much! 😑👍🏼

Super Thank You! I finally found the Treasures!

I always come back to these videos when I need to re-understand market forces haha

very well put together video on this topic, and using your experience and explanation to folks who's not familiar with it, gives a full grasp of knowledge how it works in the real world.
Thanks